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Hi – In the BPP revsion kit. Question 55. I notice the total amount to be capitalised is calculated differently to what is taught in the lectures. The question states £20m in Feb and £50m in each month thereafter to the year end 31 May. In the tutorials i understood this to be calculated as a total of £170m (£20m in Feb, £50m in March, April and May.) however, the answer calculates the total as 20 +70 + 120 + 170/ 4 months which is 95. This is then multiplied by the weighted average percentage. Can you explain how they calculated the total direct costs?
I think I’ve seen this done in a number of different ways. Personally I would take the average investment and multiply by the average percentage. So the average would be 20 + (20+50) + etc
Q54 (a) Emcee is an ‘old syllabus’ question – so I wouldn’t get terribly stressed.
What matters is that you clearly explain the rules on capitalisation…………qualifying asset etc.
I’m not sure whether you are working the right exam kit – if you are using last year’s make sure you have carefully worked through my debriefs of the 2020 exam in the recorded lectures.
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